ABT has pulled back to the historically bullish 120-day moving average
Abbott Laboratories (NYSE:ABT) stock has been falling from its recent September 13 record high of $129.69. Continuing that trend today, ABT was last seem down 1.9% to trade at $118.23. However, there is reason to believe that the equity will soon make a rebound, suggesting ABT might be able to add to its 7.8% year-to-date gain.
For one, the equity just came into contact with its 120-day moving average, after spending the majority of the last several months above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, nine similar signals have occurred in the past three years. Abbot Laboratories stock enjoyed a positive return one-month return in 78% of those cases, averaging a 3.2% gain. From its current perch, a similar move would put ABT back above the $122 level.
An unwinding of pessimism in the options pits could act as a tailwind as well. The security's 10-day put/call volume ratio of 1.70 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 90% of readings in its annual range. In other words, options traders have had strong affinity for puts during the last two weeks.
Plus, ABT is seeing well-priced premiums at the moment. The stock's Schaeffer's Volatility Index (SVI) of 18% stands higher than just 14% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.